Import \ Export

Requirement of various Documents

Importer's Registration with Regional Authorities

1 Importer \ Exporter Code No \ IEC no 2-Foreign Exchange rates 3-Import Prices 4-Documentry Letters of Credit 5- Import Documents & Procedure for retirement 6- Customs formalities for Clearance of goods\Custom duties

1-Importer \ Exporter Code no

No Import or Export shall be made by any person

without an Importer-Exporter Code No called IEC No Application for grant of IEC No Shall be made by the Registered office enclosing the following i-Application fee of Rs 1000 ii-Certificate from Banker of the Application form as per Handbook of Procedures. iii-Self certified copy of PAN

2 -Foreign Exchange rates

Foreign Exchange transaction involve exchange of

Currency of one Country to another country This is necessitated by the movement of Goods and Services across national frontiers The function of an efficient foreign exchange market is to facilitate matching of supplies and demand or various currencies at the appropriate rate of conversion i.e. Exchange rate There are two sets of rates i.e. buying & selling. The difference between the two rates is called Spread which is the profit margin.

3- Import Prices

i Ex-Works ( ex factory\ ex Godown ) means that buyer should take delivery of goods at Exporters Godown and thereafter all the risks & expenses are borne by Buyer. ii-F.O.R.\ F.O.T.- Free on Rail\Free on Truck The Sellers obligation are fulfilled when the Goods are delivered to the Carrier ( Rail \ Road) iii- F.O.B. Inclusive of Ex-Works price, packing charges, transportation charges up to the place of Shipment iv- C&F Covers F.O.B value of Goods plus cost of Freight up to the port of destination. v-C.I.F. Includes F.O.B. prices plus cost of ocean freight and marine insurance up to the port of destination.

4 Documentary Letter's Letter of Credit

L.C. is a Document issued by the Importers Bank in favour

of the Exporters giving him the authority to draw bill as per the terms contained therein. i-Revocable L.C. Can be amended or cancelled by the issuing Bank at any moment and without prior notice to the beneficiary ii-Irrevocable L.C Constitutes a definite undertaking of the issuing Bank for the payment of the bills drawn under the credit ,provided the beneficiary presents the stipulated documents to the credit nominated bank and complies with all the conditions of the credit.

4- Documentary Letters of Credit ( contd.)

iii With Recourse and Without Recourse

Credits- If the buyer fails to pay the bank within specified period, the bank can have a recourse on the importer. No such condition in without recourse iv-Acceptance Credits- Stipulates that the beneficiary must draw bill of exchange for a particular tenor v-Transferable Credits-The beneficiary can request the paying bank to pay to one or other parties.

4- Documentary Letters of Credit ( contd.)

vi-Back to Back credits -When exporter uses his L.C. in favor of local suppliers vii-Revolving L.C. -The amount of drawing is reinstated and made available to the beneficiary over a period of time as per advise of the applicant viii-Deferred payment L.C.-Mostly for Capital goods on deferred payment basis ix Transit Credit.-Is issued by one foreign country with the beneficiary in another country x-Unrestricted and Restricted Credits -credits which do not specify any bank

4 -Documentary Letters of Credit ( contd.)

Opening L.C

Approach your Bank where your account

is maintained, with the following i-Copy of Sale contract ii-Exchange control copy of Import License ( if licensed) iii-RBI approval if Imports are under deferred credit terms

4 Application for the opening of L.C. (contd.)

Name\Address of Beneficiary - Seller

Details of goods including details of currency ,

unit price, quantity and amount Type of credit Whether revocable \ irrevocable Documents required Certificate of Origin , CIF or other wise. Partial \ Trans-shipment is allowed Date & place of expiry of the credit Negotiation of Documents

5- Import Documents & Procedure for Retirement

i-Import Order ii-Order Acceptance iii-Letter of Credit iv-Transport Documents-Bill of Lading v-Bill of Exchange vi-Insurance Policy \ Certificate vii-Certificate of Origin viii-Packing list ix-Certificate of Inspection\ measurement x-Commercial Invoice xi-Freight declaration xii-Bill of Entry

5 -Import Documents & Procedure for retirement ( contd.)

i- Import Order Is a commercial transaction ,which is

important to both Importer\Exporter but also to respective Countries because it affects balance of payment. ii-Order Acceptance The Exporter gives his acceptance to the order placed by the importer and commits the shipment of products covered as per the stipulated terms & conditions. iii-L.C. Gives the authority to exporter to draw bills as per the contract price covering specified shipment of goods. iv-Transport DocumentsOcean Freight Bill of Lading Air Freight Airway bill Rail\Road-RR\GCR

5-Import documents & procedure for retirement(contd.)

v-Bill of Exchange Contains an order from the creditor to the

debtor to pay a specified amount to a person mentioned therein. vi-Insurance policy\ Certificate Is a contract whereby the Insurance company in consideration of the payment of premium by the insured agrees to indemnify the latter against the loss incurred by him in respect of goods exposed. vii-Certificate of Origin- Certificate stating the origin of goods & certified by the Chamber of Commerce or recognized agency. viii-Packing list\Note- Includes the date of packing ,connecting Invoice no, order no, name of the steamer, bill of lading no , ix Inspection\Measurement- Inspection certificate is issued by inspection authorities. Certificate of Measurement contains the name of the Vessel, the Port of Destination, description of goods etc

5- Import documents & procedure for retirment(contd,)

x-Commercial Invoice- on the Importer containing detailed description as per requirement xi-Freight declaration Required from the overseas supplier wherein the freight particulars are given xii-Bill of Entry- Is a document prepared by the importer or his clearing agent in the prescribed form

5-Import Documents & procedure for retirement(contd.)

Retirement of Import Documents The importer

will prepare documents as per the terms of contract The importers bank will scrutinize the documents as per the terms of & conditions of L.C.& deliver the documents with the following A letter authorizing the bank to debit the equivalent amount Exchange control copy of Import License ,if applicable Form A1 duly completed for remittance in foreign exchange.

6 Custom formalities for clearance of goods

i-Import Manifest \ BTN classification ii-Entry in the import department of Customs

House. iii-Presentation of Bill of Entry for appraisal iv-Clearance of goods v-Warehousing the goods vi-Classification of goods of Import Policy and assessment of Duty. vii-Customs Duty

6 Customs Duties
i- Basic Duty Is levied on all goods

imported as prescribed in First Schedule of Customs Tariff Act ii- Auxiliary Duty-Withdrawn from 28th Feb 1993 iii-Additional or Countervailing Duty iv-Specific duty v- Cess vi Demurrage charges.

Export Procedures
i- Regional Licensing authority- The Joint

Director General Of Foreign Trade for the respective area is the authority under which an Exporter has to register and obtain an IEC no ii-Registration with the Export Promotion Council Done on a prescribed form given by Council. Helps the exporter to get benefits\concession given under the export\import policy Promotion Council

Phases of Export
1- Offer & receipt of Confirmed Orders.

2-Production & Clearance of the products

for exports 3-Shipment\Custom Clearance\Marine Insurance 4-Custom formalities 5-Negotiation of Documents & realization of export proceeds

1-Offer & Receipt of confirmed orders

The proposal submitted by exporter in quotation is OFFER The offer will be made in the form of Performa Invoice containing i-The Consignee or Buyer Name & Address of the buyer ii-Description of goods-Brief description of goods with specification & other characteristics. iii-Price-Should indicate the unit & total price in mutually accepted currency Prices should be F.O.B.,C&F ,or C.I.F. iv-Conditions of sale a)-Validity b)-Escalation clause c)-Delivery schedule d)-Inspection e)-Force Mejeure clause f)-Payment terms g)-After Sales service\Warranty

1-Offer & receipt of confirmed order (contd.)

Confirmed Order When Performa Invoice

is accepted by the Buyer, it becomes confirmed order. The order duly signed by the buyer is followed by establishment of the documentary letter of credit, so that buyers commitment is complete.

2-Production & clearance of products for exports

Make arrangements of items to be manufactured. a)-Excise duty rebate For the purpose of claiming rebate,

if applicable , an exporter submits to the Superintendent of Central Excise of the locality the following Documents Gate Pass GP-1 ARE-1 form Gives the description of product, quantity , value & Excise duty payable on it. b)-Sales Tax Exemption The exporter should register with Sales Tax Authorities. c)- Pre-shipment Inspection The pre-shipment inspection scheme is administered by the Export Inspection Council

3- Shipment
The Clearing and Forwarding Agents Specialized

personnel for completion of all export formalities. The following is to be submitted ARE-1 form in original& duplicate Performa Invoice in duplicate GR-1 form Exchange control document required by RBI L.C. Certificate of Inspection Form of Declaration Shipping Bill is prepared in 5 copies, containing the name of the exporter, address , Code no, Description\Quantity of goods, Value , No of Packages and markings.

3 Custom Clearance
Carting order- The goods are moved from the warehouse for

loading in the Ship. The Forwarding Agent has to obtain permission from Port Trust Authorities. The permission given by the Superintendent in the form of Carting order. Custom Examination The remaining copies of the shipping documents( shipping bill, the Performa invoice, Inspection certificate) are presented to Custom Appraiser for verification. Let Ship- Before the goods are loaded on the ship, permission for loading has to be obtained by the exporters forwarding agent. The permission is called Let Ship Order Mate Receipt When goods are loaded in the ship , the Captain of the ship furnishes a document called Mate Receipt certifying the loading of the cargo on board the vessel as also other details brief description of cargo, no of packages ,the shipping marks, name of the vessel and date of issue, condition of the cargo

3-Marine Insurance Policy

In case of CIF quotation, the marine

insurance policy has to be obtained by the exporter by paying the premium.

4- Custom Formalities
Port Trust Dues The bill of Lading is given by

the shipping agent after the presentation of Mate receipt The exporters forwarding agent returns to the exporter the following Copy of Invoice attested by Customs Drawback copy of the shipping bill Export promotion copy of the shipping bill Clean board bill of Lading The original L.C. Duplicate copy of ARE-1 form

5-Negotiation of Documents & realization of Export proceeds

A complete set of Documents submitted to

the Bank for the purpose of negotiation are called Negotiable set of documents , containing the following Commercial invoice Certificate of Origin GR-1 form in duplicate Marine insurance policy in duplicate Bill of Lading

5-Negotiation of Documents & realization of Export proceeds (contd.)

i-Duty draw back Refers to excise &

custom duty on components which go into production ii-Central Excise rebate Can be claimed from the central excise department after submitting the proof of exports in ARE-1 form iii-Octroi & Sales tax refund After the export of goods , the exporter can approach the respective authorities for refund of the respective amounts.